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Huawei HCNA-CBSN (Constructing Basic Security

The Trump administration is on account that an govt order that might conveniently permit it to ban Huawei and other chinese language businesses from US telecom techniques, however even that would not wholly offer protection to US assistance because statistics moves so effectively throughout national borders. Even sensitive US government tips would continue to be prone if officers were communicating with allies who allowed Huawei on their 5G networks, Strayer stated.

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"there's so an awful lot information flowing everywhere, it be unimaginable to simply isolate one country's networks and feel: 'this is adequate, i'm high-quality,' " he pointed out.

The transition to 5G, which is in its earliest tiers, will mark a massive building in mobile expertise. it's going to present far quicker download speeds and the capacity to run billions extra devices on cell networks, together with sensible contraptions comparable to self sufficient cars and robust synthetic intelligence methods. whereas it should be five or extra years earlier than the gadget is wholly operational, loads of the contracts to create its simple constructing blocks might be negotiated this year.

That exponential boost in connectivity, however, will also "dramatically boost the networks' threat vectors and attack surfaces," Michael Wessel, a member of the U.S.-China financial and security evaluation commission, instructed me - mainly if a US adversary controls colossal portions of it.

China might leverage Huawei's place in 5G networks to steal "trillions" of greenbacks of intellectual property, Strayer referred to, or to implant malware on adversaries' networks. It might even shut down components of these networks amid geopolitical conflicts. Strayer's considerations would observe to any chinese enterprise, he cited, even though Huawei is, by means of a ways, the most widespread example.

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The flow towards Huawei is rarely confined to 5G developments.

Congress banned the company from US government networks remaining 12 months amid fears it will be used as a chinese government spying device and the country's Federal Communications fee has proposed a rule that might permit it to ban the company from smaller networks that settle for federal gives you, where the business has its strongest foothold.

the U.S. Justice branch also indicted Huawei's chief monetary officer and heiress Meng Wanzhou, and two affiliates in January, alleging a bunch of crimes, together with stealing robotics technology from T-cell and violating sanctions towards Iran.

however the united states' international lobbying crusade against Huawei goes a step extra, seeking to preclude China from taking part in a key position in a whole era of digital development. Its success or failure could verify the fate of cyber web protection for years, Strayer pointed out.

"We're talking to partners everywhere about this as they improve to 5G. We're elevating it on the highest diplomatic ranges," Strayer observed. "The generational nature of 5G, the transformational nature of it skill there should be a whole era of lock-in."

anxiousness about chinese technology has long existed in the u.s., fueled through the concern that the chinese language might insert a “again door” into telecom and computing networks that might permit chinese language protection features to intercept military, govt and company communications. And chinese language cyberintrusions of american groups and government entities have occurred again and again, together with via hackers suspected of engaged on behalf of China’s Ministry of State protection.

however the subject has taken on more urgency as international locations worldwide start figuring out which device suppliers will construct their 5G networks.

American officers say the historical method of looking for “returned doorways” in equipment and utility made by using chinese corporations is the incorrect method, as is searching for ties between selected executives and the chinese language govt. The bigger difficulty, they argue, is the more and more authoritarian nature of the chinese executive, the fading line between impartial company and the state and new laws for you to give Beijing the energy to seem to be into, or probably even take over, networks that agencies like Huawei have helped construct and retain.

“It’s crucial to bear in mind that chinese language company relationships with the chinese language govt aren’t like private sector company relationships with governments in the West,” referred to William R. Evanina, the director of the us’s national Counterintelligence and protection core. “China’s 2017 country wide Intelligence legislation requires chinese language groups to help, supply counsel and cooperate in China’s national intelligence work, anywhere they operate.”

The White condominium’s focus on Huawei coincides with the Trump administration’s broader crackdown on China, which has worried sweeping tariffs on chinese language goods, funding restrictions and the indictments of several chinese language nationals accused of hacking and cyberespionage. President Trump has accused China of “ripping off our nation” and plotting to grow superior at the united states’s expense.

Mr. Trump’s views, mixed with a lack of complicated evidence implicating Huawei in any espionage, have brought about some nations to query even if america’s crusade is actually about country wide safety or whether it is aimed at preventing China from gaining a aggressive part.

Administration officials see little difference in these desires.

“President Trump has identified overcoming this financial problem as essential, no longer conveniently to right the steadiness economically, to make China play by using the suggestions every person else plays by, however to steer clear of an imbalance in political/military energy sooner or later as well,” John R. Bolton, Mr. Trump’s country wide protection adviser, instructed The Washington instances on Friday. “the two points are very carefully tied together in his mind.”

When Air drive Brig. Gen. Rob Spalding left the country wide security Council in January, he became some of the few officers at the White condo discovering the protection danger posed by using the rapacious race to hyperlink up the area’s first high-velocity 5G telecommunications community, primarily between the U.S. and China.

Spalding, who in the past served as U.S. protection attaché at the U.S. Embassy in Beijing, believed that U.S. corporations should still work collectively in that race, with or with out government aid, to bake potent protection precautions into the brand new fast networks — to prevent spying, theft or destruction by means of China and others.

Spalding came up with a notional plan that could, as outlined in his paper, “at ease 5G — the Eisenhower countrywide dual carriageway system for the counsel Age,” greater heavily involve the executive in providing technology, spectrum and management, the style President John F. Kennedy increased the house application. however when the memo outlining his plan became leaked to Axios, his idea turned into misinterpreted, Spalding says, as a way to “nationalize” 5G beneath a government banner.

After the leak, his NSC detail changed into no longer renewed, he retired from the Air drive and his plan become without difficulty shelved.

for the reason that Spalding’s departure, the White condominium has pursued an aggressive approach directed at combating Beijing from dominating the U.S. 5G market, even if via banning chinese companies from doing business with U.S. corporations, or within the case of Huawei, urgent expenses against a key government. The Justice branch has also pursued an array of indictments concentrated on chinese language military and corporate espionage.

because the Trump administration ramps up pressure on China, Spalding’s erstwhile inspiration illustrates one of the most fundamental problems of dealing with the countrywide safety concerns related to 5G: while U.S. specialists and policymakers might also agree that Beijing’s dominance in this area represents a country wide security risk, makes an attempt to hold chinese language corporations out of the U.S. market may now not, on their own, be the answer.

Spalding believes the administration is taking the issue seriously, but lacks a bigger method for coping with it. “We as a nation haven’t identified that country wide security is far more about counsel these days than about bombs and bullets find it irresistible become earlier than,” spoke of Spalding. “merely conserving Huawei out of the U.S. markets isn't a adequate method.”

whereas the specifics and components don't seem to be yet naturally defined, 5G, or the fifth technology, will turn into the subsequent edition of mobile communication networks — steadily changing the existing 4G LTE networks. The 5G network promises lightning quickly connectivity and down load speeds for colossal info likes videos, and a few believe it'll hyperlink up the now big network that makes up the cyber web of things.

however 5G may turn into an illustration of how fast development has outpaced protection considerations. thousands and thousands of wise fridges and routers and child cams are sometimes bought and preprogrammed with default passwords and lack of alternative safety precautions, leaving them vulnerable to seize and use with the aid of attackers. The 5G network will most effective add extra sensors and digital connections between these objects, expanding the attack floor.

The query has develop into now the way to deal with that threat.

Spalding’s plan has just about had two alternate options: either the executive would foot the bill for a centralized network that it may appoint out — or the businesses would come together to build one and sell it back to themselves later, forsaking their aggressive business concepts for the decent of the nation. Spalding says interior resistance in government and a lobbying crusade in opposition t his attempts to “nationalize” 5G ended any discussion over his plan upfront.

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Air drive Brig. Gen. Robert Spalding (photo: U.S. Air force)

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Spalding’s plan does have supporters. Eric Spackey, a former telecom government, advised Yahoo information that Spalding’s plan, whereas unpopular with many telecom employees concentrated on their personal networks, may well be some of the handiest how to build a “amazing” and comfortable community capable of lasting the subsequent a couple of a long time.

“The dilemma is getting network suppliers to work collectively,” he told Yahoo news throughout a mobilephone interview. “What [Spalding] laid out to me turned into very rational and extremely clear — we've safety issues we under no circumstances in reality idea of lower back when we have been constructing the common networks,” he observed.

Spackey noted he didn’t feel individual carriers have been able to constructing the network with the effective requirements fundamental to look after towards “adversaries like China and Russia.” Having the govt support the challenge the usage of taxpayer cash could be “no different than the country wide transit device,” he introduced.

but one former colleague at the countrywide protection Council known as the plan “half baked” and insisted that Spalding can also have “gotten way over his skis,” first by way of failing to work more in the executive and its management, and second for suggesting a plan that appeared counter to promoting capitalist competition in the 5G area.

“He become a lamb inside a den of lions,” talked about the former NSC legit, relating to Spalding facing off against the telecoms which are already working on 5G networks. “I’m individually inquisitive about … preserving 5G dominance, however we don’t nationalize [things] in america … except it’s warfare.”

it could actually now not be struggle, but the White condominium is pursuing an aggressive strategy when it involves 5G

The countrywide safety Council, according to the Wall highway Journal and Reuters, is working on an executive order that might ban private agencies from the use of chinese telecommunication organizations Huawei and ZTE’s items in the construction of 5G networks. The order, which was independently proven to Yahoo news from two sources usual with the depend, cites country wide security officials’ subject that the chinese language government might use its influence over domestic companies to make use of the network for espionage.

The national security Council didn't respond to a request for comment.

The White condo and the intelligence neighborhood have to date no longer supplied specific examples of Huawei stealing secrets and techniques or pilfering information via telecoms or their 5G development, however have somewhat cited ongoing difficulty that Huawei, given its shut ties to the chinese language executive, could not refuse to comply with any government request for information in the future. A recent department of Justice indictment in opposition t Huawei alleged the enterprise violated sanctions via work with Iran and stole alternate secrets and techniques from T-cell.

“Huawei can be a private enterprise, however the chinese executive’s forceful response to its CFO’s arrest does display the tech giant’s pleasing repute, pursuant to China’s countrywide agenda to guide in 5G,” wrote Elsa Kania, an expert in chinese defense and know-how and a fellow with the center for a brand new American safety. “it's commonly complicated to disentangle Huawei’s industrial actions from the chinese govt’s geopolitical goals.”

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A pedestrian talks on the telephone outside a Huawei save in Beijing. (picture: Kevin Frayer/Getty pictures)

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This may no longer be a brand new difficulty. Former telecommunications tech giants like Nortel, which filed for chapter in 2009, attributed at the least one of the crucial explanations of their demise to chinese language espionage — theft of company plans and interior files accomplishing returned to the early 2000s. Huawei and ZTE were key rivals on the time as smartly, selling identical items for much less.

national safety and know-how consultants are insistent that Huawei’s involvement in espionage on behalf of the chinese govt is not theoretical.

“There are examples of chinese language espionage that remain labeled, based on James Lewis, senior director of the middle for Strategic and overseas experiences’ expertise coverage software. “I’ve viewed them, i do know them to be real,” he informed Yahoo information. “There shouldn’t be any question that there are clear hyperlinks to the chinese language intelligence capabilities.”

And in keeping with one former intelligence legit, the national security agency become already instrumental in pushing Germany now not to work with Huawei. besides the fact that children, the NSA itself has sought the right way to potentially spy on Huawei during the past, in accordance with published files from former NSA contractor Edward Snowden.

Broader condemnation of Huawei could have large attaining economic consequences for American agencies as smartly. A ban on chinese language agencies would force small organizations to tear out Huawei and ZTE products from their infrastructure, potentially with out compensation. both small American telecoms and European agencies that have already signed agreements with Huawei may well be either compelled or forced to forsake their ties to the chinese agencies to align with U.S. government requirements.

Australia has already enacted a ban, whereas European international locations like Poland, in line with the new york instances, are at present being compelled to observe swimsuit or else lose out on effective assets like a future armed forces base. Israel and others plan to be a part of the neighborhood quickly, in line with one source generic with the transforming into coalition.

the previous NSC reputable who criticized Spalding’s plan argued the ban could be “useful” at deterring Huawei. besides the fact that children, having been in government when President Trump without problems ended NSC personnel’ plans to blackball chinese tech enterprise ZTE via a tweet closing might also, the authentic concerned a couple of repeat flip-flop. “I bet Trump caves similar to [he did with] ZTE,” the legit spoke of.

The issue with the ban — in addition to Spalding’s idea to “nationalize” the networks — is charge. “Huawei is subsidized via the executive,” talked about Lewis of CSIS. “which you can’t do this for free.”

The proposed ban within the White house can be accompanied “via some price,” mentioned Lewis, but that should be offset if it enables for a couple years to ruin ties with Huawei as a substitute of getting to exchange know-how appropriate away. alternate options to Huawei, together with Samsung and Ericsson, charge extra cash — however are currently informed by means of the government as more comfy.

however, the ban “sends a great message” talked about Lewis, peculiarly when paired with a global coalition.

Spackey, the former telecom government and latest CEO of Bluewater protection, which manufactures uniforms for the armed forces, also said that any national 5G network “mighty” enough to be any place near “impenetrable to dangerous actors” would be very expensive — however price the can charge ultimately. “Even with executive guide, it’s going to take 5-10 years,” he concluded.

No count number what occurs, the consequences of the race between the U.S. and China could lead to a geopolitical deadlock, argued Eurasia community in a recent white paper, the place countries will must opt for which network to undertake — putting international locations with competing ties to the U.S. and China in a tricky position. Imposing a ban on chinese language products inside the U.S. could make that divide all of the clearer.

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photo: Omar Marques/SOPA pictures/LightRocket by way of Getty images

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And nations like Hungary, the place a 5G contend with China became introduced last year, may not go along with U.S. wishes.

nations are “being advised to make a choice,” referred to Spalding. “which you can’t have U.S. security guarantees and decide to in reality undermine collective safety in response to your financial relationships with a totalitarian executive.”

these selections, counting on the speed of development with 5G, can be on the horizon.

“We’re already seeing 5G rolling out throughout us…and China is a frontrunner,” observed Emily Walz, a lead analyst at defense contractor SOS foreign, who these days co-authored a U.S. executive-sponsored record on China’s web of things. China’s efforts to develop a functioning, extensive-achieving 5G community are assisting it turn into a “requisites maker,” which increases its influence in shaping the way forward for 5G deployment worldwide and earnings of chinese language groups, Walz mentioned.

At this element, progress in 5G is an inevitability — however the benefits and costs of in quest of a ban with no U.S. physique of agencies mutually concentrated on digital protection are unclear.

Spalding, before he left the White condo, had hoped to strategy groups “to say, probably you might come collectively, form a consortium, construct this community” to center of attention on encryption and constructing in a layer of safety, he instructed Yahoo news.

however Spalding’s efforts ended when he left the NSC.

“And so presently, as a result of there turned into definitely no one engaged on this assignment aside from me,” he noted, “loads of what went into it changed into misplaced when I left.”

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One angry downtown St. Paul property owner decided that violating city regulations on skyway access could help her deal with unwanted visitors who drink, urinate and sleep in her building. So landlord Jaunae Brooks started locking the doors to the skyways at 8 p.m.

The city owns the skyways and currently requires that they be open from 6 a.m. until 2 a.m. Brooks’ building overlooks Mears Park and is an important link to Lowertown, an increasingly popular nighttime entertainment zone with bars, restaurants and CHS Field. Maintaining skyway accessibility is seen as a factor in the area’s success.

Earlier this month, the City Council denied Brooks’ request for an exemption to the ordinance, but she vowed to continue to shut her doors at 8 p.m. because the fines will be less expensive than the costs of cleaning up what’s left behind by late-night visitors.

Fourth-quarter earnings from continuing operations up 42.9% to $909 million

Full-year earnings from continuing operations up 15.3% to $3.4 billion

Fourth-quarter diluted EPS from continuing operations up 46.2% to $3.07

Full-year diluted EPS from continuing operations up 17.4% to $11.22

Company-wide revenue increased 16.9% year-over-year

Full-year revenue growth in all five segments

General Dynamics (NYSE: GD) today reported full-year earnings from continuing operations of $3.4 billion on revenue of $36.2 billion, and quarterly earnings from continuing operations of $909 million on $10.4 billion in revenue. Year-over-year revenue grew in all five segments.

Fourth-quarter 2018 earnings from continuing operations, which grew 42.9 percent over fourth-quarter 2017, would have grown 20.4 percent absent a one-time, non-cash decrement to earnings in 2017 from the 2017 Tax Cuts and Jobs Act. On a per share basis, diluted earnings per share (EPS) from continuing operations was $3.07, a 46.2 percent increase over the year-ago quarter. For the year, diluted EPS from continuing operations was $11.22, a 17.4 percent increase from 2017.

"General Dynamics delivered solid performance in 2018," said Phebe N. Novakovic, chairman and chief executive officer. "Our Aerospace segment successfully managed through a new model transition while achieving good order intake. Our defense businesses had strong operating performance and continued to book significant new business."

Segment Highlights

AerospaceAerospace's 2018 full-year revenue was $8.5 billion, with operating earnings of $1.5 billion and an operating margin of 17.6 percent, even with its ongoing transition to new aircraft models. Book-to-bill was 0.8-to-1.0 for the quarter and 0.9-to-1.0 for the year. Gulfstream delivered the first all-new G500 in the third quarter and continued G500 deliveries in the fourth quarter.

Combat SystemsCombat Systems reported 2018 full-year revenue of $6.2 billion, up 4.9 percent over 2017. Operating earnings were $962 million and operating margin was 15.4 percent. The group achieved a book-to-bill of 1.3-to-1.0 for the fourth quarter, building on significant awards earlier in the year including M1A2 Abrams tank upgrades and additional Stryker double-V-hull vehicles. The group was also selected to deliver prototype vehicles for the U.S. Army's Mobile Protected Firepower (MPF) program.

Information TechnologyInformation Technology had 2018 full-year revenue of $8.3 billion, up 87.5 percent over 2017 and up 4.3 percent excluding the acquisition of CSRA. Operating earnings for the year were $608 million, up 63 percent over 2017. The combination of General Dynamics Information Technology and CSRA in the second quarter created a premier service provider to customers across defense, intelligence and federal civilian markets. The group achieved a book-to-bill of 1.0-to-1.0 for the year, with $8 billion in backlog and $25 billion in total estimated contract value.

Mission SystemsMission Systems' 2018 full-year revenue was $4.7 billion, up 5.5 percent over 2017. Operating earnings were $659 million, up 3.3 percent over 2017. Operating margin for the year was 13.9 percent. The group had a book-to-bill of 1.0-to-1.0 for the year, with many significant orders including a $3.9 billion maximum potential indefinite delivery, indefinite quantity (IDIQ) contract for the U.S. Army's Common Hardware Systems-5 (CHS-5) program.

Marine SystemsMarine Systems reported 2018 full-year revenue of $8.5 billion, up 6.2 percent over 2017. Operating earnings grew by 11.1 percent to $761 million, and operating margin for the year expanded 40 basis points to 9 percent. In 2018, the segment won several key contracts as well as $607 million in contract modifications on its $6.1 billion potential value contract to perform design and development work for the Columbia ballistic missile submarine. Book-to-bill grew year-over-year from 1.2-to-1.0 to 1.3-to-1.0.

CashNet cash provided by operating activities for the year totaled $3.1 billion. Free cash flow from operations, defined as net cash provided by operating activities less capital expenditures, was $2.5 billion in 2018, after a $255 million discretionary pension plan contribution.

Capital DeploymentThe company repurchased 7.6 million of its outstanding shares in the fourth quarter of 2018, and 10.1 million of its outstanding shares for $1.8 billion for the year. The company paid out $1.1 billion in dividends in 2018.

BacklogTotal backlog at the end of 2018 was $67.9 billion, up 7.4 percent from 2017. The estimated potential contract value, representing management's estimate of value in unfunded IDIQ contracts and unexercised options, was $35.5 billion, up 43.2 percent from 2017. Total estimated contract value, the sum of all backlog components, was $103.4 billion, up 17.5 percent from 2017. Orders remained strong across the company with a consolidated book-to-bill of 1.0-to-1.0 for the year.

About General DynamicsHeadquartered in Falls Church, Virginia, General Dynamics is a global aerospace and defense company that offers a broad portfolio of products and services in business aviation; combat vehicles, weapons systems and munitions; IT services; C4ISR solutions; and shipbuilding and ship repair. The company's 2018 revenue was $36.2 billion. More information is available at www.generaldynamics.com.

Certain statements made in this press release, including any statements as to future results of operations and financial projections, may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements are based on management's expectations, estimates, projections and assumptions. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Therefore, actual future results and trends may differ materially from what is forecast in forward-looking statements due to a variety of factors. Additional information regarding these factors is contained in the company's filings with the Securities and Exchange Commission, including, without limitation, its Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q. All forward-looking statements speak only as of the date they were made. The company does not undertake any obligation to update or publicly release any revisions to forward-looking statements to reflect events, circumstances or changes in expectations after the date of this press release.

WEBCAST INFORMATION: General Dynamics will webcast its fourth-quarter and full-year 2018 financial results conference call at 9 a.m. EST on Wednesday, January 30, 2019. The webcast will be a listen-only audio event available at www.generaldynamics.com. An on-demand replay of the webcast will be available by 12 p.m. on January 30 and will continue for 12 months. To hear a recording of the conference call by telephone, please call 877-344-7529 (international: 412-317-0088); passcode 10127475. The phone replay will be available through February 6, 2019. Charts furnished to investors and securities analysts in connection with General Dynamics' announcement of its financial results for the quarter and year ended December 31, 2018, are available on its website at www.generaldynamics.com. General Dynamics intends to supplement those charts on its website after its earnings call today to include information about 2019 guidance presented on its earnings call.

2018 results include the unfavorable impact of one-time charges of approximately $75 associated with costs to complete the acquisition of CSRA Inc. In the table above, approximately $45 of compensation-related costs was reported in operating costs and expenses, and approximately $30 of transaction costs was reported in other, net.

(b)

Prior-period information has been restated for the adoption of ASU 2017-07, which we adopted on January 1, 2018.

EXHIBIT C

REVENUE AND OPERATING EARNINGS BY SEGMENT - (UNAUDITED)

DOLLARS IN MILLIONS

Three Months Ended December 31

Variance

2018

2017*

$

%

Revenue:

Aerospace

$

2,704

$

1,982

$

722

36.4

%

Combat Systems

1,744

1,748

(4)

(0.2)

%

Information Technology

2,382

1,232

1,150

93.3

%

Mission Systems

1,251

1,255

(4)

(0.3)

%

Marine Systems

2,297

2,060

237

11.5

%

Total

$

10,378

$

8,277

$

2,101

25.4

%

Operating earnings:

Aerospace

$

382

$

336

$

46

13.7

%

Combat Systems

261

260

1

0.4

%

Information Technology

194

95

99

104.2

%

Mission Systems

181

187

(6)

(3.2)

%

Marine Systems

213

167

46

27.5

%

Corporate

(5)

15

(20)

(133.3)

%

Total

$

1,226

$

1,060

$

166

15.7

%

Operating margin:

Aerospace

14.1

%

17.0

%

Combat Systems

15.0

%

14.9

%

Information Technology

8.1

%

7.7

%

Mission Systems

14.5

%

14.9

%

Marine Systems

9.3

%

8.1

%

Total

11.8

%

12.8

%

*

Prior-period information has been restated for the adoption of ASU 2017-07, which we adopted on January 1, 2018.

EXHIBIT D

REVENUE AND OPERATING EARNINGS BY SEGMENT - (UNAUDITED)

DOLLARS IN MILLIONS

Year Ended December 31

Variance

2018 (a)

2017 (b)

$

%

Revenue:

Aerospace

$

8,455

$

8,129

$

326

4.0

%

Combat Systems

6,241

5,949

292

4.9

%

Information Technology

8,269

4,410

3,859

87.5

%

Mission Systems

4,726

4,481

245

5.5

%

Marine Systems

8,502

8,004

498

6.2

%

Total

$

36,193

$

30,973

$

5,220

16.9

%

Operating earnings:

Aerospace

$

1,490

$

1,577

$

(87)

(5.5)

%

Combat Systems

962

937

25

2.7

%

Information Technology

608

373

235

63.0

%

Mission Systems

659

638

21

3.3

%

Marine Systems

761

685

76

11.1

%

Corporate

(23)

26

(49)

(188.5)

%

Total

$

4,457

$

4,236

$

221

5.2

%

Operating margin:

Aerospace

17.6

%

19.4

%

Combat Systems

15.4

%

15.8

%

Information Technology

7.4

%

8.5

%

Mission Systems

13.9

%

14.2

%

Marine Systems

9.0

%

8.6

%

Total

12.3

%

13.7

%

(a)

2018 results include the unfavorable impact of approximately $45 of compensation-related one-time charges associated with costs to complete the acquisition of CSRA Inc. This amount was reported as a reduction of Corporate operating earnings in the table above.

(b)

Prior-period information has been restated for the adoption of ASU 2017-07, which we adopted on January 1, 2018.

(Increase) decrease in assets, net of effects of business acquisitions:

Accounts receivable

417

(195)

Unbilled receivables

(800)

(987)

Inventories

(591)

(182)

Other current assets

310

207

Increase (decrease) in liabilities, net of effects of business acquisitions:

Accounts payable

(197)

657

Customer advances and deposits

36

264

Other, net

(285)

235

Net cash provided by operating activities

3,148

3,876

Cash flows from investing activities:

Business acquisitions, net of cash acquired

(10,099)

(399)

Capital expenditures

(690)

(428)

Proceeds from sales of assets

562

50

Other, net

(7)

(11)

Net cash used by investing activities

(10,234)

(788)

Cash flows from financing activities:

Proceeds from fixed-rate notes

6,461

985

Purchases of common stock

(1,769)

(1,558)

Dividends paid

(1,075)

(986)

Proceeds from floating-rate notes

1,000

—

Proceeds from (repayments of) commercial paper, net

851

—

Repayment of CSRA accounts receivable purchase agreement

(450)

—

Proceeds from stock option exercises

136

163

Repayment of fixed-rate notes

—

(900)

Other, net

(68)

(103)

Net cash provided (used) by financing activities

5,086

(2,399)

Net cash used by discontinued operations

(20)

(40)

Net (decrease) increase in cash and equivalents

(2,020)

649

Cash and equivalents at beginning of year

2,983

2,334

Cash and equivalents at end of year

$

963

$

2,983

EXHIBIT G

PRELIMINARY FINANCIAL INFORMATION - (UNAUDITED)

DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS

2018

2017

Fourth Quarter

Fourth Quarter

Other Financial Information:

Return on equity (a)

28.1

%

26.6

%

Debt-to-equity (b)

105.8

%

34.8

%

Debt-to-capital (c)

51.4

%

25.8

%

Book value per share (d)

$

40.64

$

38.52

Income tax payments, net

$

227

$

219

Company-sponsored research and development (e)

$

146

$

154

Shares outstanding

288,698,149

296,895,608

Non-GAAP Financial Measures:

2018

2017

Fourth Quarter

Twelve Months

Fourth Quarter

Twelve Months

Earnings before interest, taxes, depreciation

and amortization:

Earnings from continuing operations

$

909

$

3,358

$

636

$

2,912

Interest, net

112

356

27

103

Provision for income tax, net

223

727

372

1,165

Depreciation of property, plant and equipment

141

493

93

362

Amortization of intangible assets

80

270

22

79

Earnings before interest, taxes, depreciation

and amortization (f)

$

1,465

$

5,204

$

1,150

$

4,621

Free cash flow from operations:

Net cash provided by operating activities

$

2,067

$

3,148

$

1,994

$

3,876

Capital expenditures

(243)

(690)

(155)

(428)

Free cash flow from operations (g)

$

1,824

$

2,458

$

1,839

$

3,448

Return on invested capital:

Earnings from continuing operations

$

3,358

$

2,912

After-tax interest expense

295

76

After-tax amortization expense

213

51

Net operating profit after taxes

3,866

3,039

Average invested capital

25,367

18,099

Return on invested capital (h)

15.2

%

16.8

%

Notes describing the calculation of the other financial information and a reconciliation of non-GAAP financial measures are on the following page.

EXHIBIT G (cont.)

PRELIMINARY FINANCIAL INFORMATION - (UNAUDITED)

DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS

(a)

Return on equity is calculated by dividing earnings from continuing operations for the latest 12-month period by our average equity during that period.

(b)

Debt-to-equity ratio is calculated as total debt divided by total equity as of year end.

(c)

Debt-to-capital ratio is calculated as total debt divided by the sum of total debt plus total equity as of year end.

(d)

Book value per share is calculated as total equity divided by total outstanding shares as of year end.

(e)

Includes independent research and development and Aerospace product-development costs.

(f)

We believe earnings before interest, taxes, depreciation and amortization (EBITDA) is a useful measure for investors because it provides another measure of our profitability and our ability to service our debt. We calculate EBITDA by adding back interest, taxes, depreciation and amortization to earnings from continuing operations. The most directly comparable GAAP measure to EBITDA is earnings from continuing operations.

(g)

We believe free cash flow from operations is a useful measure for investors because it portrays our ability to generate cash from our businesses for purposes such as repaying maturing debt, funding business acquisitions, repurchasing our common stock and paying dividends. We use free cash flow from operations to assess the quality of our earnings and as a key performance measure in evaluating management. The most directly comparable GAAP measure to free cash flow from operations is net cash provided by operating activities.

(h)

We believe return on invested capital (ROIC) is a useful measure for investors because it reflects our ability to generate returns from the capital we have deployed in our operations. We use ROIC to evaluate investment decisions and as a performance measure in evaluating management. We define ROIC as net operating profit after taxes divided by average invested capital. Net operating profit after taxes is defined as earnings from continuing operations plus after-tax interest and amortization expense, calculated using the statutory federal income tax rate. Average invested capital is defined as the sum of the average debt and shareholders' equity excluding accumulated other comprehensive loss. ROIC excludes goodwill impairments and non-economic accounting changes as they are not reflective of company performance. The most directly comparable GAAP measure to net operating profit after taxes is earnings from continuing operations.

EXHIBIT H

BACKLOG - (UNAUDITED)

DOLLARS IN MILLIONS

Funded

Unfunded

TotalBacklog

EstimatedPotentialContract Value*

TotalEstimatedContract Value

Fourth Quarter 2018:

Aerospace

$

11,208

$

167

$

11,375

$

3,130

$

14,505

Combat Systems

16,174

424

16,598

4,187

20,785

Information Technology

4,717

3,248

7,965

17,066

25,031

Mission Systems

4,890

445

5,335

7,409

12,744

Marine Systems

18,837

7,761

26,598

3,703

30,301

Total

$

55,826

$

12,045

$

67,871

$

35,495

$

103,366

Third Quarter 2018:

Aerospace

$

11,696

$

173

$

11,869

$

2,239

$

14,108

Combat Systems

15,865

395

16,260

3,857

20,117

Information Technology

5,222

4,731

9,953

17,365

27,318

Mission Systems

5,024

587

5,611

7,453

13,064

Marine Systems

16,615

9,221

25,836

3,797

29,633

Total

$

54,422

$

15,107

$

69,529

$

34,711

$

104,240

Fourth Quarter 2017:

Aerospace

$

12,319

$

147

$

12,466

$

1,955

$

14,421

Combat Systems

17,158

458

17,616

3,154

20,770

Information Technology

2,140

1,471

3,611

10,114

13,725

Mission Systems

4,542

721

5,263

4,761

10,024

Marine Systems

15,872

8,347

24,219

4,809

29,028

Total

$

52,031

$

11,144

$

63,175

$

24,793

$

87,968

*

The estimated potential contract value includes work awarded on unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options associated with existing firm contracts, including options and other agreements with existing customers to purchase new aircraft and aircraft services. We recognize options in backlog when the customer exercises the option and establishes a firm order. For IDIQ contracts, we evaluate the amount of funding we expect to receive and include this amount in our estimated potential contract value. The actual amount of funding received in the future may be higher or lower than our estimate of potential contract value.

$40 to provide IT management and support services for two cloud-based infrastructure locations.

•

$30 to provide operations and maintenance support services for a Department of Homeland Security (DHS) data center.

Mission Systems:

•

$185 from the U.S. Navy for combat and seaframe control systems on Independence-variant Littoral Combat Ships.

•

$90 from the Navy to provide fire control system modifications for ballistic-missile (SSBN) and guided-missile (SSGN) submarines.

•

$80 from the Army for computing and communications equipment under the Common Hardware Systems-5 (CHS-5) program.

•

$55 to provide engineering, integration and software support services for the Canadian Army's Land Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance (C4ISR) System.

As of July 2015, an estimated 114 million people in assessed countries were in need of humanitarian assistance, compared to 40 million just over ten years ago.1 Needs are not only growing, but their drivers and time horizons have also changed: most people in crisis live in contexts of fragility, where existing vulnerabilities due to causes like poverty, food insecurity and exclusion are compounded by conflict and violence, intensifying natural disasters, and unplanned urbanization. The international humanitarian system2 was set up to address exceptional circumstances, but for people in these environments, crises and insecurity are the norm. Cycles of conflict and disasters are displacing millions, leaving people vulnerable and in need of humanitarian action for decades, and in some cases, for generations.

Alongside these challenges are positive trends: local, national, regional and international capacity to prepare for and manage crises continues to grow. Actors from all backgrounds are increasingly taking initiative, joining forces, and getting more organized to address growing needs, beginning with affected people themselves. The international humanitarian system also continues to play a fundamental role in providing assistance and protection in times of conflict, when local systems are depleted by crisis, and where resources or technical knowledge are insufficient.

International actors have also made significant progress in strengthening humanitarian coordination, professionalizing and establishing standards for delivery, managing crisis risk, building resilience and promoting accountability to affected people.

Despite these gains at all levels, the complexity and volume of crises means that many people still do not receive the assistance and protection they need, while others may be trapped in a humanitarian holding pattern that offers no clear path to better their circumstances. Conflict continues to drive the bulk of humanitarian action, but those responding to chronic vulnerability, climate-driven shocks, rapid urbanization, and a host of other hazards now coexist with conflict-driven crises in a complex and interconnected picture. Protracted crises are the norm, and humanitarian actors have taken on a wider range of roles: addressing prolonged displacement; filling gaps in social safety nets; promote preparedness; coping with the changing nature of violence and new hazards; and facing urbanization and climate-driven crises. In this environment, clarifying effectiveness requires an understanding of the expectations against which humanitarian assistance and protection are now measured.

This study echoes the view that progress in addressing these challenges can be triggered, in part, by the adoption of a shared understanding of what humanitarian effectiveness means in today’s world, and through collective efforts to incentivize and measure progress toward achieving it.

The World Humanitarian Summit (WHS) marks a rare opportunity to advance an agenda around this kind of shared understanding. The Sustainable Development Agenda, which has just been adopted, provides another opportunity: a global results framework that must benefit everyone, regardless of circumstance. In order to achieve the Sustainable Development Goals (SDGs), the most vulnerable people, including those in crisis, must be a particular priority. For humanitarians to contribute to that vision, meeting basic needs in crisis will remain critical, but it is no longer enough. The 2030 Agenda calls on humanitarians locally, nationally, and internationally to work differently with one another and with counterparts in development, peace operations, climate change, and gender equality to move people out of crisis: reducing vulnerability, doubling down on risk management, and tackling root causes of crises and conflict.

The 2030 Agenda includes a vision for global solidarity with people in fragile environments, a renewed commitment to resolve or prevent conflict and the recognition of the important role of migrants, internally displaced people, and refugees in achieving development goals. By recognizing that many of the drivers of humanitarian crises “threaten to reverse much of the development progress made in recent decades,” the Agenda opens a formal bridge to greater cooperation that will “leave no one behind.”

In light of these factors, this study highlights 12 of the elements that are critical to effective humanitarian assistance and protection, and describes five overarching shifts in mind-set and approach that can contribute to improvements in supporting people in crisis, as well as moving people out of crisis.

The tools and approaches needed to deliver effective humanitarian action differ based on a number of factors, but the most prominent one is context. In the aftermath of rapid-onset, climate-related disaster, for example, the emphasis may be on providing rapid, quality aid where the crisis has overwhelmed existing capacity to cope. It could also mean supporting the response of actors such as national military or local businesses, in providing the immediate logistics support to enable others to save more lives. In a conflict environment, where some actors may be compromised by or implicated in fighting, international humanitarian engagement plays a unique role in delivery, protection, and advocacy. In still other contexts, such as situations of chronic vulnerability, effectiveness has a different dimension, requiring collaboration beyond the humanitarian community, away from cycles of short-term delivery and toward a sustainable framework of human rights and social protection.

While every context is different, as we reflect on what it means to be effective, it can help to consider the profile of a person most commonly facing humanitarian needs. Based on today’s humanitarian landscape, we now know that this person is likely to be a woman. She and her children are likely to have fled their home, and to be living without the right to work or schooling, and without basic services like water and health care. She is likely to be fleeing from or living in conflict, where she faces an increased risk of violence in her home and in the community around her.

She and her family are more likely to live in these circumstances of displacement, insecurity and chronic vulnerability for more than a decade,4 meeting their needs through community networks, diaspora support, and, in some cases, through actors in the international humanitarian aid system. When aid is available, it may not offer what is most important to her and her family, such as education for her children, safe housing or a source of livelihood. As years pass with limited improvement in her prospects, the systems designed to protect her and her family, and to meet their needs, are unlikely to transform her circumstances. This study considers how humanitarian action can contribute to more effective results for this woman and others in crisis.

The study is based on extensive consultation with a range of stakeholders to understand whether affected people feel their needs are being met, who is meeting them, and what more can be done to move people out of crisis (see page 12 for details on the research approach). The findings are based on a 1,600-person global survey, six country visits that included hundreds of interviews, and other consultations.

The study begins with a description of the Humanitarian Landscape, which details the global trends that shape humanitarian needs, risks, and expectations for response. It then situates the study in context of concurrent global change agendas and recent trends in the dialogue on humanitarian effectiveness by exploring the question, “Why effectiveness, why now?” The Findings, which summarize what we heard in the course of the study, are organized around 12 elements of effectiveness, which have been grouped into three tiers, as follows:

CRISIS-AFFECTED PEOPLE HAVE THE RIGHT TO ASSISTANCE AND PROTECTION THAT IS THOSE REACHING CRISIS-AFFECTED PEOPLE SHOULD BE

Relevant

Timely

Accountable

RESULTS: these elements describe the desired results for crisis affected people

THOSE REACHING CRISIS-AFFECTED PEOPLE SHOULD BE

Complementary

Connected

Coherent

Nimble

PRACTICE: these elements describe the desired behaviour and approach for any actor involved in achieving results for crisis-affected people

THE ENVIRONMENT FOR HUMANITARIAN ACTION MUST BE ENABLED BY

Respect for Principles

Leadership

Resources

Information and Evidence

Governance

ENABLERs: These are some of the essential enablers that must be part of the operating environment in order to achieve results for crisis-affected people.

As noted above, any model for effectiveness should be applied and evaluated in context: some elements of effectiveness will naturally be more important and feasible in some contexts, while others make take precedence or add more value in others. This is not a framework solely for the United Nations (UN) or international actors, but should contribute to the effort to advance effectiveness by all actors contributing to humanitarian action.

The study summarizes the proposed changes in the “How do we get there” section, presenting five overarching shifts in mindset and practice that will contribute to greater humanitarian effectiveness. These shifts also contribute to advancing areas of shared interests with change agendas such as the Sustainable Development Agenda and those for peacebuilding, climate change, and gender equality. The proposed shifts have strong implications for international humanitarian actors and donors as well as governments, national civil society organizations, and others contributing to humanitarian action such as private sector actors, militaries, and diaspora communities. Achieving them will require a commitment, among humanitarian actors and other key stakeholders, to examine incentive structures and overcome persistent barriers to ensure their advancement.

Those shifts are as follows:

Reinforce, don’t replace existing capacities and coping strategiesInternational humanitarian actors must respond to needs quickly, with relevant responses, and at the necessary scale. But their aim should always be to enable and empower national actors and institutions, not to substitute for them. In order to reinforce the self-reliance of affected people and undertake targeted capacity development, humanitarian actors must have a strong understanding of the operating context, ideally before a crisis happens, and be informed by local actors and development partners with an established presence and network. These efforts should include supporting national and local actors and institutions through appropriate political engagement, partnerships, and financial investment to protect civilians, manage risk, guide response and reduce vulnerability. The primacy of national and local institutions cannot come at the expense of people themselves: where national and local actors undermine or compromise the rights and safety of crisis-affected people, international actors should also uphold and reinforce the rights of affected people, stressing the primary responsibilities of States and parties to conflict under relevant international law and other instruments.

Enter with an Exit: collaborate to reduce and end humanitarian needAcknowledging that humanitarian crises are neither short-lived nor isolated, humanitarian actors must work more closely with others to set context-specific targets for reducing need and improving the prospects of crisis-affected people to achieve the Sustainable Development Goals. This must include concrete partnerships with governments, development and peacebuilding communities, and other relevant actors in order to: identify shared interests and clarify roles in reducing the risk of chronic shocks, strengthen social protection measures, prevent prolonged displacement, and promote sustainable solutions for internally displaced people and refugees. The 2030 Agenda for Sustainable Development provides a number of useful commitments to support this aim, including support for displaced people to return to a path to dignity and safety. Planning should employ multi-year compacts that bring together relevant actors at the national and regional levels to clarify how they will contribute to specific, dynamic benchmarks and outcome targets against which to measure progress.

Leverage comparative advantage: strengthen connectivity and strategic leadershipCoordination platforms, tools, and financing models should reflect the diversity of actors meeting humanitarian needs and the contexts in which crises happen. This requires: building stronger connections between national and international actors and between humanitarian and non-humanitarians. These coordination structures should be designed ahead of crises, particularly in areas at high risk, aiming to recognize the range of capacities needed. Strategic leadership should be strongly supported, both among governments and international actors: reinforcing obligations, calling for accountability, and emphasizing discipline. Leadership should identify and promote concrete outcomes and specific positive results for crisis-affected people, facilitating collaboration that cuts across traditional silos.

See the whole picture: 360-degrees of risks and needsTo keep needs at the center of humanitarian action, all actors require consistent definition of humanitarian need and frequent analysis of its drivers, including disaggregation for the unique needs of people within the affected population. Open and safe data will be critical to advancing this, with the maximum level of sharing and access encouraged, balanced with the highest degree of protection for privacy and safety of affected people. In addition, responses to crises, whether driven by conflict or natural disasters, are consistently more effective when the groundwork is in place ahead of time to prevent crises or attenuate their impact and prepare for residual risks, based on an analysis of known risks and capacities, and with investments in preparedness where risk of disasters is greatest.

Measure shared results for collective accountabilityCollective accountability should be promoted by all actors leading and delivering on humanitarian action, including governments, international actors, donors, national actors and others. Shared benchmarks for success will mean bringing together a range of actors based on shared interests and comparative advantage in order to achieve real results for affected people. Common feedback mechanisms and aggregated data on needs and priorities of affected people will be critical enablers of this, linked to decision-making processes on financing, planning and operations.Building on tools like the IASC’s Commitments on Accountability to Affected People, and the Core Humanitarian Standard on Quality and Accountability, benchmarks should be linked to regularly collected and analysed feedback from affected people, with adjustments made to both inputs and targets as a result of that feedback. This process will require each actor to deliver on commitments in a predictable manner, based on a clear contribution to broader outcomes, with flexible tools and structures to adapt to feedback.

Given the urgency of undertaking these shifts deliberately, actors responsible for making them happen must be held accountable. The study proposes that a global accountability framework be formulated to track progress on improving specific aspects of humanitarian effectiveness, used to inform interagency and intergovernmental processes as well as operational and policy options in crises. As a contribution to this accountability framework, the study proposes a set of “guiding principles” that highlight the main changes in relation to the study’s 12 elements of effectiveness. These are meant as a starting point for discussion, not as a definitive list. Once adopted, such a framework would serve as the basis for periodic progress reviews to highlight successes and best practice, barriers to progress, and areas of new or on-going concern that require adaptation or change in course. It would aim to build on the Organization for Economic Cooperation and Development - Development Assistance Committee (OECD-DAC) criteria and the Core Humanitarian Standard on Quality and Accountability (CHS), and other relevant frameworks.

What sets this study’s effectiveness elements apart from many others is the inclusion of the “enablers.” In many crisis environments, the weaknesses or gaps in enablers such as governance and respect for principles are the very reason for a humanitarian crisis. In some contexts, however, there is significant progress that can be made on addressing some of them, and analysing these factors often forms the basis of the humanitarian advocacy agenda to tackle persistent challenges. Some of them, such as leadership and resources, will be required in any environment and should be included in the full picture of effectiveness. The enablers also represent some of the connecting points with other agendas including human rights, peace and security, and development. The study does not suggest that these enablers must be perfectly intact to realize an effective result, but it does recognize that a forward-looking agenda must continue to tackle these systemic considerations.